On September 21, 2022, the District of Columbia Human Rights Enhancement Amendment Act of 2022 was enacted into law.^[1] One of the Act’s changes amends the definition of “employee” in  the District of Columbia Human Rights Act (DCHRA)[2] to include an individual working or seeking work as an independent contractor (IC).^[3] This amendment extends the DCHRA’s employment antidiscrimination protections to thousands of workers in the District of Columbia, preventing employers from discriminating against ICs based on protected categories, including the commonly-known traits of race; color; religion; national origin; sex; and age.[4] The DCHRA also extends protections against discrimination based on marital status; personal appearance; sexual orientation; gender identity or expression; family responsibilities; political affiliation; disability; matriculation; familial status; genetic information; credit information; and status as a victim or family member of a victim of domestic violence, a sexual offense, or stalking.^[5] Now, independent contractors in the District of Columbia will be protected under the DCHRA from employment discrimination, granting ICs important legal protections that can affect wages and wealth. In this article, I will describe the landscape of independent contractors in the United States; the effects of discrimination on employment and how the new amendment will benefit low-income ICs; and proposals to ensure that ICs are adequately protected under additional employment laws.

1. Independent Contractors in the United States

The difference between an “independent contractor” and “employee” is a highly contested issue.[6] A common definition of “independent contractor” is “a person hired to do work who controls how the work is done.”[7] A legal definition is similar: “someone who is entrusted to undertake a specific project but who is left free to do the assigned work and to choose the method for accomplishing it.”[8] The DCHRA does not explicitly define “independent contractor,” but notes that the term “does not mean a service vendor who provides a discrete service to an individual customer.”[9] For example, a plumber who owns their own business and is hired by a homeowner would not be an IC under the DCHRA. For the purposes of this article, the term “independent contractor” may include, but is not limited to, freelance workers, “outsourced” or “contract” workers, and “gig” workers who earn money via the online gig economy such as through applications like Uber, Lyft, and DoorDash.

In addition, quantifying the number of independent contractors is difficult. The 2017 Contingent Worker Supplement (CWS) issued by the Bureau of Labor Statistics (BLS) estimated that in May 2017, 6.9 percent of total employed workers in the United States self-identified as independent contractors, independent consultants, or freelance workers, regardless of whether they were self-employed or wage or salary workers.[10] The CWS also reported that “contingent workers,” or workers who do not expect their jobs to last, made up 3.8 percent of total employed workers, or 5.9 million workers nationwide.[11] CWS found that contingent workers earned less than noncontingent workers in 2017; the median weekly earnings for contingent workers were 77 percent of those of noncontingent workers.[12] In the May 2017 CWS, BLS attempted to quantify the number of contingent workers who performed “electronically mediated work,” or gig work, estimating that electronically mediated workers accounted for 1.0 percent of all workers in May 2017.[13]

2. The Benefits of the New DCHRA Amendment on Low-Income Workers

The new DCHRA amendment will benefits low-income workers who are classified as independent contractors by extending protections against employment discrimination. Independent contractors are often employed in low-wage jobs.^[14] Business outsourcing of workers in the low-wage janitorial, fast food, home care, and food service industries has resulted in these workers receiving lower wages and worse working conditions compared to workers who are employed directly by a business.^[15] For example, a business may contract with an outside party for the services of a janitor, rather than hiring that janitor themselves, which can result in a 7 percent dip in wages.[16] In recent years, the number of ICs has increased with the rise of the online platform “gig economy,” such as the ride-share platform Uber and home care workers.^[17] In 2021, 16 percent of American adults reported earning money via an online gig platform, and adults with lower incomes were more likely to report earning money in the gig economy compared to adults with middle and upper incomes.^[18] Indeed, 25 percent of adults with a lower income reported earning money via the gig economy, compared to 9 percent with an upper income and 13 percent with a middle income. Fifty-eight percent of gig workers also reported that money from gig work was “essential” or “important” for meeting their basic needs.^[19]

The inclusion of ICs under the DCHRA’s definition of employee will benefit low-income ICDs by ensuring ICs have a right to a workplace free of discrimination. The DCHRA prohibits employers from discriminating against individuals based on protected characteristics in hiring; firing; otherwise discriminating against any individual with respect to compensation, terms, conditions, or privileges of employment; limiting, segregating, or classifying employees in any way which would deprive or tend to deprive any individual of employment opportunities; or otherwise adversely affect an individual’s status as an employee.^[20] Discrimination in employment is common in low-wage jobs and against people of color.^[21] Failure to hire, termination based on protected categories, and retaliation resulting in an adverse action, such as termination, have a clear link to poverty: periods without steady employment reflect lost income.

Research also suggests that experiencing discrimination like disparate treatment, hostile work environment, and retaliation can diminish workers’ feelings of psychological safety and belonging.^[22] These negative effects can lead to decreased morale and productivity and cause workers to leave their jobs.[23] In addition, there are well-documented concerns from gig workers about harassment on-the-job, particularly for workers who drive for rideshare applications like Uber and Lyft.^[24] Nineteen percent of gig workers reported experiencing unwanted sexual harassment from customers.^[25] If ICs such as gig workers earn wages based on a commission, lower productivity could mean a decrease in wages. The new DCHRA amendment ensures that ICs are protected from employment discrimination and do not face additional obstacles to earning income.

3. Proposals for Extending Employment Protections for Independent Contractors

Although the amendment extends the DCHRA’s protection against discrimination in employment to ICs, ICs are still unprotected by other DC employment statutes, including minimum wage laws,^[26] workers’ compensation,^[27] unemployment compensation,^[28] and paid family and medical leave.^[29] In addition, independent contractors are not generally included in the definition of “employee” under federal antidiscrimination statutes, such as Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, and the Age Discrimination in Employment Act.^[30] Proposed solutions include extending protection of these labor laws to independent contractors and adopting the “ABC” test for determining whether a worker is an employee or an independent contractor. ^[31] The “ABC” test seeks to simplify the classification of employees by presuming that a worker is an employee, not an independent contractor, unless: (A) the individual is and will continue to be free from control or direction over the performance of the labor or services by the party for whom the labor or services are performed, both under the contract of labor or service and in fact; (B) the labor or service provided by the individual is outside the regular course of operations of the entity; and (C) the individual is engaged in an independently established business, for which she independently establishes the price of her labor.[32]

Implementing the ABC test would simplify how courts determine whether a worker is an employee or independent contractor. Currently, for example, DC courts use a four-factor common law test to determine whether a worker was an employee or IC for the purposes of unemployment compensation: (1) the selection and engagement of the individual hired, (2) the payment of wages, (3) the power of the one who hires over the other whom he has hired, and (4) whether the service performed by the person hired is a part of the regular business of the one who hired.^[33] The ABC test can be codified into law, such as California has done,[34] directing courts to use the simplified three-step test to ensure that workers are not misclassified as ICs and deprived of essential employment protections.

The Department of Labor (DOL) just recently introduced a proposal that would make it more likely for independent contractors, including gig workers, to be classified as employees.[35] This proposal would extend coverage Fair Labor Standards Act, which guarantees a minimum wage and overtime pay, to more ICs.[36] This shift in policy may also encourage other departments and agencies like the EEOC to revise how it classifies workers, which would bring antidiscrimination protections under Title VII to millions of workers, just as the District of Columbia has done.[37] These solutions would likely produce an increase in the number of workers protected by employment statutes, as employers have been known to misclassify their workers, either intentionally or unintentionally.^[38] Extending these employment protections to independent contractors is essential to ensuring that all workers receive their fair share of wages, wealth, and prosperity.

 

[1] 69 D.C. Reg. 011942 (Sept. 21, 2022), https://lims.dccouncil.gov/downloads/LIMS/47097/Other/B24-0229-L172001.pdf.

[2] D.C. Code § 2-1401.01 et seq.

[3] 69 D.C. Reg. 009218 (July 29, 2022), https://lims.dccouncil.gov/downloads/LIMS/47097/Signed_Act/B24-0229-Signed_Act.pdf.

[4] D.C. Code § 2-1401.11(a).

[5] Id.

[6] See Sarah Leberstein & Catherine Ruckelshaus, Independent Contractor vs. Employee: Why Independent Contractor Misclassification Matters and What We Can Do To Stop It, Nat’l Emp. L. Project 2 (May 2016), https://www.nelp.org/wp-content/uploads/Policy-Brief-Independent-Contractor-vs-Employee.pdf.

[7] Independent Contractor, Merriam-Webster Dictionary, https://www.merriam-webster.com/dictionary/independent%20contractor (last visited Oct. 12, 2022 at 11:41 AM).

[8] Independent Contractor, Black’s Law Dictionary (11th ed. 2019).

[9] D.C. Code § 2-1401.02(9)(B).

[10] Contingent and Alternative Employment Arrangements, U.S. Bureau Lab. Stats. 2 (June 7, 2018), https://www.bls.gov/news.release/pdf/conemp.pdf.

[11] Id. at 2, 3.

[12] Id. at 5.

[13] Electronically Mediated Work: New Questions in the Contingent Worker Supplement, U.S. Bureau Lab. Stats. (Sept. 2018), https://www.bls.gov/opub/mlr/2018/article/electronically-mediated-work-new-questions-in-the-contingent-worker-supplement.htm. BLS noted that the questions related to electronically mediated work did not work as intended, so the estimate is questionable. Id.; see also Martin Di Caro, How Many People in Washington Region Drive for Uber or Lyft? It is Still Hard to Say, WAMU 88.5 (Aug. 24, 2017), https://wamu.org/story/17/08/24/many-people-washington-region-drive-uber-lyft-still-hard-say/.

[14] See Gig Workers in America: Profiles, Mindsets, and Financial Wellness, Prudential Ins. Co. Am. 2 (Aug. 1, 2017), https://www.prudential.com/media/managed/documents/rp/Gig_Economy_Whitepaper.pdf (finding that gig-only workers earned an average of $36,500 per year and full-time employees earned an average of $62,700 per year).

[15] Catherine Ruckelshaus et al., Nat’l Emp. L. Project, Who’s the Boss: Restoring Accountability for Labor Standards in Outsourced Work 1 (May 2014), https://s27147.pcdn.co/wp-content/uploads/2015/02/Whos-the-Boss-Restoring-Accountability-Labor-Standards-Outsourced-Work-Report.pdf.

[16] Id.

[17] Monica Anderson et al., The State of Gig Work in 2021, Pew Rsch. Ctr. (Dec. 8, 2021), https://www.pewresearch.org/internet/2021/12/08/the-state-of-gig-work-in-2021/.

[18] Id.

[19] Id.

[20] D.C. Code § 2-1401.11(a)(1)(A).

[21] See, e.g., Key Findings from a Survey of Women Fast Food Workers, Hart Rsch. Assocs. 1 (Oct. 5, 2016), https://hartresearch.com/wp-content/uploads/2016/10/Fast-Food-Worker-Survey-Memo-10-5-16.pdf (finding that 40 percent of women in the fast food industry have experienced sexual harassment); Jocelyn Frye, Not Just the Rich and Famous: The Pervasiveness of Sexual Harassment Across Industries Affects All Workers, Ctr. for Am. Progress (Nov. 20, 2017), https://www.americanprogress.org/article/not-just-rich-famous/; Doni Crawford & Kamolika Das, Black Workers Matter: How the District’s History of Exploitation & Discrimination Continues to Harm Black Workers, DC Fiscal Pol’y Inst. 5–6 (Jan. 28, 2020), https://www.dcfpi.org/wp-content/uploads/2020/01/Black-Workers-Matter-PDF-5.pdf.

[22] See, e.g., Ellyn Maese & Camille Lloyd, Understanding the Effects of Discrimination in the Workplace, Gallup (May 26, 2021) https://www.gallup.com/workplace/349865/understanding-effects-discrimination-workplace.aspx.

[23] Id.

[24] See Anderson et al., supra note 16; Dave Lee, ‘Thrown to the wolves’—the women who drive for Uber and Lyft, BBC (Jan. 29, 2019) https://www.bbc.com/news/technology-46990533.

[25] Anderson et al., supra note 16. Under Title VII, in the case of customers subjecting employees to harassment, employers will be held to a negligence standard when determining if employers should be held liable for the customer’s harassment of the employee. See, e.g., Freeman v. Dal-Tile Corp., 750 F.3d 413, 422–23 (4th Cir. 2014). Employees must show the employer knew or should have known about situation and have or should have taken actions to remedy it. Id. at 423.

[26] See “Who is protected under the law?” Off. Att’y Gen. for D.C., https://oag.dc.gov/worker-rights/wage-and-hour-laws#WhoProtected (last visited Oct. 12, 2022 at 10:35 AM).

[27] See, e.g., D.C. Code § 32-1501(9).

[28] See Liability Questions, D.C. Dep’t Emp. Servs., https://does.dc.gov/service/liability-questions (last visited Oct. 12, 2022 at 10:35 AM).

[29] See About the DC Office of Paid Family Leave, D.C. Dep’t Emp. Servs., https://does.dc.gov/page/about-dc-office-paid-family-leave (last visited Oct. 12, 2022 at 10:35 AM).

[30] See Coverage, U.S. Equal Emp. Opportunity Comm’n, https://www.eeoc.gov/employers/coverage-0 (last visited Oct. 12, 2022 at 9:30 AM).

[31] See, e.g., Rebecca Smith, How Two Court Decisions Could Mean Gig Is Up For Many Companies That Call Their Workers Independent Contractors, Nat’l Emp. L. Project (May 18, 2018), https://www.nelp.org/blog/two-court-decisions-bring-victory-misclassified-workers/.

[32] Id.

[33] See, e.g., Caison v. Project Support Servs., Inc., 99 A.3d 243, 248 (D.C. 2014).

[34] See Cal. Lab. Code § 2775.

[35] Employee or Independent Contractor Classification Under the Fair Labor Standards Act, 87 Fed. Reg. 62218 (proposed Oct. 13, 2022) (to be codified at 29 C.F.R. pts. 780, 788, 795), https://www.federalregister.gov/public-inspection/2022-21454/employee-or-independent-contractor-classification-under-the-fair-labor-standards-act.

[36] Id.

[37] See Noam Scheiber, Biden Proposal Could Lead to Employee Status for Gig Workers, N.Y. Times (Oct. 11, 2022), https://www.nytimes.com/2022/10/11/business/economy/biden-gig-workers-contractors-employees.html.

[38] See Independent Contractor Misclassification Imposes Huge Costs on Workers and Federal and State Treasuries, Nat’l Emp. L. Project (Oct. 26, 2020), https://www.nelp.org/publication/independent-contractor-misclassification-imposes-huge-costs-workers-federal-state-treasuries-update-october-2020/.